-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CpynAmHo61z2c1d+NkM++ikEZYTINys4vjq6NIT/pJMRWLM6xVSlsPEKt5L2ezv1 DBGmmEO9cROsV6cGpcCXpw== 0001275287-06-000413.txt : 20060126 0001275287-06-000413.hdr.sgml : 20060126 20060126161843 ACCESSION NUMBER: 0001275287-06-000413 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060126 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060126 DATE AS OF CHANGE: 20060126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CATHAY GENERAL BANCORP CENTRAL INDEX KEY: 0000861842 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 954274680 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31830 FILM NUMBER: 06553846 BUSINESS ADDRESS: STREET 1: 777 N BROADWAY CITY: LOS ANGELES STATE: CA ZIP: 90012 BUSINESS PHONE: 2136254700 MAIL ADDRESS: STREET 1: 777 NORTH BROADWAY CITY: LOS ANGELES STATE: CA ZIP: 90012 FORMER COMPANY: FORMER CONFORMED NAME: CATHAY BANCORP INC DATE OF NAME CHANGE: 19930328 8-K 1 cg4610.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): January 26, 2006 CATHAY GENERAL BANCORP (Exact name of registrant as specified in its charter) Delaware 0-18630 95-4274680 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 777 North Broadway, Los Angeles, California 90012 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (213) 625-4700 Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On January 26, 2006, Cathay General Bancorp announced, in a press release, its financial results for the quarter and year ended December 31, 2005. That press release is attached hereto as Exhibit 99.1. The foregoing information and the attached exhibit are intended to be furnished only and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits -------- 99.1 Press Release of Cathay General Bancorp dated January 26, 2006. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: January 26, 2006 CATHAY GENERAL BANCORP By: /s/ Heng W. Cheng ------------------------------ Heng W. Chen Executive Vice President and Chief Financial Officer EXHIBIT INDEX Number Exhibit - ------ --------------------------------------------------------------- 99.1 Press Release of Cathay General Bancorp dated January 26, 2006. EX-99.1 2 cg4610ex991.txt EXHIBIT 99.1 Exhibit 99.1 FOR IMMEDIATE RELEASE - --------------------- For: Cathay General Bancorp Contact: Heng W. Chen 777 N. Broadway (213) 625-4752 Los Angeles, CA 90012 CATHAY GENERAL BANCORP ANNOUNCES 12th CONSECUTIVE YEAR OF DOUBLE ---------------------------------------------------------------- DIGIT EARNINGS GROWTH AND RECORD 2005 EARNINGS OF $104.1 MILLION ---------------------------------------------------------------- Los Angeles, Calif., January 26: Cathay General Bancorp (the "Company", NASDAQ: CATY), the holding company for Cathay Bank (the "Bank"), today announced results for the fourth quarter and for the year ended December 31, 2005. STRONG FINANCIAL PERFORMANCE
Three months ended December 31, Year ended December 31, ---------------------------------- ----------------------------------- 2005 2004 2005 2004 - ------------------------------------------------------------------------------------------------------------------ Net income $ 26.7 million $ 21.6 million $ 104.1 million $ 86.8 million Basic earnings per share $ 0.53 $ 0.43 $ 2.07 $ 1.74 Diluted earnings per share $ 0.53 $ 0.42 $ 2.05 $ 1.72 Return on average assets 1.70% 1.44% 1.69% 1.51% Return on average stockholders' equity 13.93% 12.44% 14.05% 13.27% Efficiency ratio 37.14% 39.76% 36.86% 39.23%
FOURTH QUARTER HIGHLIGHTS o Fourth quarter earnings increased $5.1 million, or 23.9%, compared to the same quarter a year ago, which had included an after-tax non-cash charge of $3.2 million for "other-than-temporary impairment" on perpetually floating-rate preferred securities. o Diluted earnings per share reached $0.53, increasing 26.2% compared to the same quarter a year ago. o Return on average assets was 1.70% for the quarter ended December 31, 2005, compared to 1.74% for the quarter ended September 30, 2005, and 1.44% for the same quarter a year ago. o Return on average stockholders' equity was 13.93% for the quarter ended December 31, 2005, compared to 14.22% for the quarter ended September 30, 2005, and 12.44% for the same quarter a year ago. o Net interest margin on a fully taxable equivalent basis was 4.34% compared to 4.14% for the same quarter a year ago and 4.28% for the third quarter of 2005. o Net charge-offs were $829,000 during the fourth quarter of 2005, compared to net recoveries of $881,000 for the quarter ended September 30, 2005, and net charge-offs of $3.2 million for the same quarter of 2004. o Gross loans increased from September 30, 2005, by $277.8 million, or 6.4%, for the quarter to $4.6 billion at December 31, 2005. o The Company has received regulatory approval for purchase of up to 100% of the shares of Great Eastern Bank and continues to pursue the acquisition. o On October 27, 2005, the Company was added as a member to the Standard & Poor's (S&P) MidCap 400 Index. (more) Page 2 FULL YEAR HIGHLIGHTS o Record net income of $104.1 million, or 19.9%, over 2004. This strong earnings performance resulted in an increase of 19.2% in diluted earnings per share to $2.05 compared with diluted earnings per share of $1.72 a year ago. o Gross loans at December 31, 2005, were $4.6 billion, an increase of $815.8 million, or 21.3%, over December 31, 2004. o Deposit balances at December 31, 2005, grew to $4.9 billion, an increase of $321.2 million, or 7.0%, compared to deposit balance at December 31, 2004. o Nonaccrual loans decreased $3.4 million from $19.2 million at December 31, 2004, to $15.8 million at December 31, 2005. o Net charge-offs of $2.1 million for 2005 compared to net charge-offs of $2.9 million in 2004. o Efficiency ratio was 36.86% for the year 2005 compared to 39.23% for the year 2004. "We are pleased to report our twelfth consecutive year of double digit earnings growth. Continued strong organic loan growth, a higher net interest margin, low net charge-offs, and an improved efficiency ratio were the main factors that contributed to the record results," commented Dunson K. Cheng, Chairman of the Board, Chief Executive Officer, and President of the Company. "We expect to open a new office in downtown San Francisco during the first quarter and are working on plans to open several additional offices during 2006 to attract new customers and to expand our branch network," said Peter Wu, Executive Vice Chairman and Chief Operating Officer. "We are optimistic that 2006 should be another record year for Cathay General Bancorp," concluded Dunson K. Cheng. INCOME STATEMENT REVIEW Net interest income before provision for loan losses Our net interest income before provision for loan losses increased by $5.7 million to $62.4 million during the fourth quarter of 2005, or 10.0% higher than the $56.7 million during the same quarter a year ago. The increase was due primarily to the strong growth in loans and the increases in market interest rates. The net interest margin, on a fully taxable-equivalent basis, was 4.34% for the fourth quarter of 2005. The net interest margin increased from 4.28% in the third quarter of 2005 and 4.14% in the fourth quarter of 2004, primarily as a result of the decrease in securities as a proportion of earning assets and the increases in short term interest rates. For the fourth quarter of 2005, the interest rate earned on our average interest-earning assets was 6.67% on a fully taxable-equivalent basis, and our cost of funds on average interest-bearing liabilities equaled 2.87%. In comparison, for the fourth quarter of 2004, the interest rate earned on our average interest-earning assets was 5.46% and our cost of funds on average interest-bearing liabilities equaled 1.63%. The net interest spread decreased from 3.83% in the fourth quarter of 2004 to 3.80% in the fourth quarter of 2005 due to the increase in wholesale borrowing rates. (more) Page 3 Provision for loan losses The provision for loan losses was zero for the fourth quarter of 2005 and for the fourth quarter of 2004 compared to a negative $1.0 million provision for loan losses for the third quarter of 2005. The provision for loan losses was based on the review of the adequacy of the allowance for loan losses at December 31, 2005. The provision for loan losses represents the charge or credit against current earnings that is determined by management, through a credit review process, as the amount needed to establish an allowance that management believes to be sufficient to absorb loan losses inherent in the Company's loan portfolio. The following table summarizes the charge-offs and recoveries for the quarters shown:
For the three months ended, - ------------------------------------------------------------------------------------- December 31, September 30, December 31, (Dollars in thousands) 2005 2005 2004 - ------------------------------------------------ ---------------------------------- Charge-offs $ 1,284 $ - $ 4,872 Recoveries 455 881 1,711 --------------- --------------- --------------- Net Charge-offs (Recoveries) $ 829 $ (881) $ 3,161 --------------- --------------- ---------------
Non-interest income Non-interest income, which includes revenues from service charges on deposit accounts, letters of credit commissions, securities gains (losses), gains (losses) on loan sales, wire transfer fees, and other sources of fee income, was $5.2 million for the fourth quarter of 2005, an increase of $4.6 million, compared to the non-interest income of $629,000 for the fourth quarter of 2004. Included in the fourth quarter 2004 results was a non-cash charge of $5.5 million, or $3.2 million net of tax, for "other-than-temporary impairment" on perpetual floating-rate preferred securities issued by government sponsored enterprises. For the fourth quarter of 2005, the Company recorded net securities gains of $183,000 compared to net securities losses of $4.9 million for the same quarter in 2004. Includes in these net securities gains and losses were the "other-than-temporary impairment" charge of $115,000 for the fourth quarter of 2005 and $5.5 million for the fourth quarter of 2004. Letters of credit commissions decreased $184,000, or 14.3%, from $1.3 million in the fourth quarter of 2004 to $1.1 million in the fourth quarter of 2005 due primarily to lower letter of credit volumes and the amortization during 2005 of all standby letter of credit fees received. Depository service fees decreased $280,000, or 18.0%, from $1.6 million in the fourth quarter of 2004 to $1.3 million in the fourth quarter of 2005 due to decreases in wire transfer charges and the increases in short term interest rates which resulted in lower account analysis fees collected from depositors. Other operating income decreased $107,000, or 3.9%, from $2.7 million in the fourth quarter of 2004 to $2.6 million in the fourth quarter of 2005. (more) Page 4 Non-interest expense Non-interest expense increased $2.3 million, or 10.1%, to $25.1 million in the fourth quarter of 2005 compared to the same quarter a year ago primarily due to increases in salaries and employee benefits expenses, professional service expenses, marketing expenses, and operating expenses of other real estate owned ("OREO") and affordable housing investments. The efficiency ratio was 37.14% for the fourth quarter of 2005 compared to 39.76% for the year ago quarter. Salaries and employee benefits increased $1.15 million, or 9.2%, from $12.6 million in the fourth quarter of 2004 to $13.7 million in the fourth quarter of 2005 due primarily to the higher amortization expense for stock options. Occupancy expense increased by $174,000, or 8.5%, from $2.1 million in the fourth quarter of 2004 to $2.2 million in the fourth quarter of 2005, due primarily to the addition of new branches. Professional services expenses increased $340,000, or 19.2%, from $1.8 million in the fourth quarter of 2004 to $2.1 million in the fourth quarter of 2005 due primarily to increases in external auditing expenses, professional expenses related to testing of the Company's internal control over financial reporting, and consulting expenses. OREO expenses increased $215,000 in the fourth quarter of 2005 compared to the fourth quarter of 2004 primarily due to the $250,000 receipt of the reimbursement for certain environmental cleanup expenditures in the fourth quarter of 2004. Expenses from operation of affordable housing investments that qualified for low-income housing tax credits increased $229,000, or 27.8%, to $1.1 million compared to $823,000 in the same quarter a year ago due to additional investments in affordable housing investments. Income taxes The effective tax rate was 37.1% for the fourth quarter of 2005 and 37.6% for the fourth quarter of 2004. The effective tax rate was 37.5% for the twelve months of 2005, compared to 38.2% for the twelve months of 2004. On December 31, 2003, the California Franchise Tax Board (FTB) announced its intent to list certain transactions that in its view constitute potentially abusive tax shelters. Included in the transactions subject to this listing were transactions utilizing regulated investment companies (RICs) and real estate investment trusts (REITs). As part of the notification indicating the listed transactions, the FTB also indicated its position that it intends to disallow tax benefits associated with these transactions. While the Company continues to believe that the tax benefits recorded in three prior years with respect to its RIC were appropriate and fully defensible under California law, the Company has deemed it prudent to participate in Voluntary Compliance Initiative - Option 2, requiring payment of all California taxes and interest on these disputed 2000 through 2002 tax benefits, and permitting the Company to claim a refund for these years while avoiding certain potential penalties. The Company retains potential exposure for assertion of an accuracy-related penalty should the FTB prevail in its position in addition to the risk of not being successful in its refund claims. As of December 31, 2005, the Company reflected a $12.1 million net state tax receivable for the years 2000, 2001, and 2002 after giving effect to reserves for loss contingencies on the refund claims, or an equivalent of $7.9 million after giving effect to Federal tax benefits. The FTB is currently in the process of reviewing and assessing our refund claims for taxes and interest for tax years 2000 through 2002. Although the Company believes its tax deductions related to the regulated investment company were appropriate and fully defensible, there can be no assurance of the outcome of its refund claims, and an adverse outcome on the refund claims could result in a loss of all or a portion of the $7.9 million net state tax receivable after giving effect to Federal tax benefits. BALANCE SHEET REVIEW Total assets increased by $275.3 million, or 4.5%, to $6.4 billion at December 31, 2005 from year-end 2004 of $6.1 billion. The increase in total assets was represented primarily by loan growth, partially offset by a decrease of securities available-for-sale. (more) Page 5 The growth of gross loans to $4.6 billion as of December 31, 2005, from $3.8 billion as of December 31, 2004, represents growth of $815.8 million, or 21.3%, due primarily to increases in commercial mortgage loans. The growth in gross loans during the fourth quarter was $277.8 million, or 6.4%. The changes in the loan composition from year-end 2004 are presented below:
December 31, December 31, % (Dollars in thousands) 2005 2004 Change - ---------------------------------------- --------------- --------------- --------------- LOANS Commercial $ 1,110,401 $ 955,377 16 Residential mortgage and equity lines 431,289 331,727 30 Commercial mortgage 2,598,157 2,119,349 23 Real estate construction 492,622 412,611 19 Installment 13,662 10,481 30 Other 1,684 2,443 (31) --------------- --------------- Gross loans and leases $ 4,647,815 $ 3,831,988 21 Allowance for loan losses (60,251) (62,880) (4) Unamortized deferred loan fees (12,733) (11,644) 9 --------------- --------------- Total loans and leases, net $ 4,574,831 $ 3,757,464 22 =============== ===============
Total deposits increased $321.2 million, or 7.0%, to $4.9 billion from year-end 2004 of $4.6 billion. The changes in the deposit composition from year-end 2004 are presented below:
December 31, December 31, % (Dollars in thousands) 2005 2004 Change - --------------------------------------- --------------- --------------- --------------- DEPOSITS Non-interest bearing accounts $ 726,722 $ 674,791 8 NOW accounts 240,885 253,767 (5) Money market accounts 523,076 588,526 (11) Savings 364,793 418,041 (13) Time deposits under $100 641,411 539,811 19 Time deposits of $100 or more 2,419,463 2,120,201 14 --------------- --------------- Total deposits $ 4,916,350 $ 4,595,137 7 =============== ===============
Advances from the Federal Home Loan Bank ("FHLB") decreased $330.0 million to $215.0 million at December 31, 2005, compared to $545.0 million at December 31, 2004. Securities sold under agreement to repurchase increased $185.0 million to $200.0 million at December 31, 2005. The Bank entered into long-term repurchase agreements totaling $200.0 million during the quarter which have a final maturity of five years. The repurchase agreements have enabled us to lower our reliance on FHLB borrowings and provide us with long-term borrowing at a lower cost. Federal funds purchased increased $43.0 million to $119.0 million at December 31, 2005, from $76.0 million at December 31, 2004. (more) Page 6 ASSET QUALITY REVIEW Non-performing assets to gross loans was 0.39% at December 31, 2005, compared to 0.59% at December 31, 2004, and 0.40% at September 30, 2005. Total non-performing assets decreased $4.6 million, or 20.3%, to $17.9 million at December 31, 2005, compared with $22.5 million at December 31, 2004. The allowance for loan losses was $60.3 million at December 31, 2005, and represented the amount that the Company believes to be sufficient to absorb loan losses inherent in the Company's loan portfolio. The allowance for loan losses represented 1.30% of period-end gross loans and 337% of non-performing loans at December 31, 2005. The comparable ratios were 1.64% of gross loans and 280% of non-performing loans at December 31, 2004. Results of the changes to the Company's non-performing assets and troubled debt restructurings are highlighted below:
December 31, December 31, % (Dollars in thousands) 2005 2004 Change - ---------------------------------------- --------------- --------------- --------------- NON-PERFORMING ASSETS Accruing loans past due 90 days or more $ 2,106 $ 3,260 (35) Non-accrual loans 15,799 19,211 (18) --------------- --------------- Total non-performing loans 17,905 22,471 (20) Other real estate owned 0 0 --------------- --------------- Total non-performing assets $ 17,905 $ 22,471 (20) --------------- --------------- Troubled debt restructurings $ 3,088 $ 1,006 207 =============== ===============
The balance of restructured loans increased $2.1 million to $3.1 million as of December 31, 2005, compared to $1.0 million as of December 31, 2004. The restructured loans were comprised of two borrowers as of December 31, 2005. CAPITAL ADEQUACY REVIEW At December 31, 2005, the Tier 1 risk-based capital ratio of 10.66%, total risk-based capital ratio of 11.77%, and Tier 1 leverage capital ratio of 9.80%, continue to place the Company in the "well capitalized" category, which is defined as institutions with a total risk-based capital ratio equal to or greater than ten percent, a Tier 1 risk-based capital ratio equal to or greater than six percent, and a Tier 1 leverage capital ratio equal to or greater than five percent. At December 31, 2004, the Company's Tier 1 risk-based capital ratio was 10.78%, the total risk-based capital ratio was 12.03%, and Tier 1 leverage capital ratio was 8.86%. For the twelve months of 2005, the Company repurchased 738,542 shares of its common stock for $24.5 million, or $33.18 average cost per share. No shares were repurchased during the fourth quarter of 2005. At December 31, 2005, 451,703 shares remain under the Company's latest stock buyback authorization which was announced on March 18, 2005. YEAR-TO-DATE REVIEW Net income was $104.1 million, or $2.05 per diluted share for the twelve months ended December 31, 2005, an increase of 19.9% in net income over the $86.8 million, or $1.72 per diluted share for the twelve months ended December 31, 2004, due primarily to the increase of net interest income. The net interest margin on a fully-taxable-equivalent basis for 2005 increased 17 basis points to 4.26% compared to 4.09% in 2004. Return on average stockholders' equity was 14.05% and return on average assets was 1.69% in 2005, compared to a return on average stockholders' equity of 13.27% and a return on average assets of 1.51% in 2004. The efficiency ratio in 2005 was 36.86% compared to 39.23% in 2004. (more) Page 7 ABOUT CATHAY GENERAL BANCORP Cathay General Bancorp is the holding company for Cathay Bank, a California state-chartered bank. Founded in 1962, Cathay Bank offers a wide range of financial services. Cathay Bank currently operates 29 branches in California, four branches in New York State, one in Massachusetts, one in Houston, Texas, two in Washington State, and representative offices in Taipei, Hong Kong, and Shanghai. Cathay Bank's website is found at http://www.cathaybank.com/. FORWARD-LOOKING STATEMENTS AND OTHER NOTICES Statements made in this press release, other than statements of historical fact, are forward-looking statements within the meaning of the applicable provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, but are not limited to, such words as "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "will," "should," "could," "predicts," "potential," "continue," or the negative of such terms and other comparable terminology or similar expressions. Forward-looking statements are not guarantees. They involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements, of Cathay General Bancorp to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties and other factors include, but are not limited to, adverse developments or conditions related to or arising from: the Company's ability to successfully consummate a transaction with Great Eastern Bank or realize the benefits of such a transaction if consummated, the Company's ability to realize the benefits of its merger with GBC Bancorp, expansion into new markets, fluctuations in interest rates, demographic changes, inflation, increases in competition, deterioration in asset or credit quality, earthquake or other natural disasters affecting the condition of real estate collateral, changes in the availability of capital, legislative and regulatory developments, such as the potential effects of California tax legislation enacted in late 2003 and the subsequent Franchise Tax Board announcement on December 31, 2003, regarding the taxation of real estate investment trusts and registered investment companies, changes in business strategy, including the formation of a real estate investment trust, and general economic or business conditions in California and other regions where Cathay Bank has operations, such as the impact of the California budget deficit. These and other factors are further described in Cathay General Bancorp's Annual Report on Form 10-K for the year ended December 31, 2004, its reports and registration statements filed (including those filed by GBC Bancorp prior to the merger) with the Securities and Exchange Commission ("SEC") and other filings it makes in the future with the SEC from time to time. All forward-looking statements speak only as of the date of this news release. Cathay General Bancorp has no intention and undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise or to publicly announce the results of any revision of any forward-looking statement to reflect future developments or events. There can be no guarantee that any transaction between Cathay General Bancorp and Great Eastern Bank will occur or what the price or terms of any such transaction may be. Cathay General Bancorp's filings with the SEC are available to the public from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov, or by request directed to Cathay General Bancorp, 777 N. Broadway, Los Angeles, CA 90012, Attention: Investor Relations (213) 625-4749. (more) Page 8 CATHAY GENERAL BANCORP CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
Three months ended December 31, Twelve months ended December 31, (Dollars in thousands, ------------------------------------ ------------------------------------ except per share data) 2005 2004 % Change 2005 2004 % Change - ----------------------------------------------------------------------------------------------------------------------- FINANCIAL PERFORMANCE Net interest income before provision for loan losses $ 62,372 $ 56,705 10 $ 240,382 $ 214,817 12 Provision (reversal) for loan losses - - - (500) - (100) ----------------------- ----------------------- Net interest income after provision (reversal) for loan losses 62,372 56,705 10 240,882 214,817 12 Non-interest income 5,181 629 724 22,486 16,265 38 Non-interest expense 25,091 22,795 10 96,887 90,660 7 ----------------------- ----------------------- Income before income tax expense 42,462 34,539 23 166,481 140,422 19 Income tax expense 15,750 12,971 21 62,390 53,609 16 ----------------------- ----------------------- Net income $ 26,712 $ 21,568 24 $ 104,091 $ 86,813 20 ======================= ======================= Net income per common share: Basic $ 0.53 $ 0.43 23 $ 2.07 $ 1.74 19 Diluted $ 0.53 $ 0.42 26 $ 2.05 $ 1.72 19 Cash dividends paid per common share $ 0.09 $ 0.09 - $ 0.36 $ 0.30 20 ======================================================================================================================= SELECTED RATIOS Return on average assets 1.70% 1.44% 18 1.69% 1.51% 12 Return on average stockholders' equity 13.93% 12.44% 12 14.05% 13.27% 6 Efficiency ratio 37.14% 39.76% (7) 36.86% 39.23% (6) Dividend payout ratio 16.90% 20.80% (19) 17.44% 17.19% 1 ======================================================================================================================= YIELD ANALYSIS (Fully-taxable-equivalent) Average interest-earning assets 6.67% 5.46% 22 6.20% 5.22% 19 Average interest-bearing liabilities 2.87% 1.63% 76 2.38% 1.39% 71 Net interest spread 3.80% 3.83% (1) 3.82% 3.83% (0) Net interest margin 4.34% 4.14% 5 4.26% 4.09% 4 ======================================================================================================================= December 31, December 31, 2005 2004 ----------- ----------- CAPITAL RATIOS Tier 1 risk-based capital ratio 10.66% 10.78% Total risk-based capital ratio 11.77% 12.03% Tier 1 leverage capital ratio 9.80% 8.86% =======================================================================================================================
(more) Page 9 CATHAY GENERAL BANCORP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except December 31, December 31, share and per share data) 2005 2004 % change - -------------------------------------------------- ------------ ------------ ------------ ASSETS Cash and due from banks $ 109,275 $ 86,133 27 Securities available-for-sale (amortized cost of $1,264,578 in 2005 and $1,811,891 in 2004) 1,241,708 1,817,942 (32) Loans 4,647,815 3,831,988 21 Less: Allowance for loan losses (60,251) (62,880) (4) Unamortized deferred loan fees, net (12,733) (11,644) 9 ------------ ------------ Loans, net 4,574,831 3,757,464 22 Affordable housing investments, net 61,449 45,145 36 Premises and equipment, net 33,912 33,421 1 Customers' liability on acceptances 16,153 14,368 12 Accrued interest receivable 24,767 21,712 14 Goodwill 239,527 241,013 (1) Other intangible assets, net 41,508 47,494 (13) Other assets 30,183 33,313 (9) ------------ ------------ Total assets $ 6,373,313 $ 6,098,005 5 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Non-interest-bearing demand deposits $ 726,722 $ 674,791 8 Interest-bearing deposits: NOW deposits 240,885 253,767 (5) Money market deposits 523,076 588,526 (11) Savings deposits 364,793 418,041 (13) Time deposits under $100 641,411 539,811 19 Time deposits of $100 or more 2,419,463 2,120,201 14 ------------ ------------ Total deposits 4,916,350 4,595,137 7 ------------ ------------ Federal funds purchased 119,000 76,000 57 Securities sold under agreement to repurchase 200,000 15,000 1,233 Advances from the Federal Home Loan Bank 215,000 545,000 (61) Other borrowings 40,507 17,116 137 Junior subordinated notes 53,976 53,916 0 Acceptances outstanding 16,153 14,368 12 Minority interest in consolidated subsidiaries 8,500 8,620 (1) Other liabilities 30,210 56,855 (47) ------------ ------------ Total liabilities 5,599,696 5,382,012 4 ------------ ------------ Commitments and contingencies - - - ------------ ------------ Total stockholders' equity 773,617 715,993 8 ------------ ------------ Total liabilities and stockholders' equity $ 6,373,313 $ 6,098,005 5 ============ ============ Book value per share $ 15.41 $ 14.13 9 Number of shares outstanding 50,191,089 50,677,896
(more) Page 10 CATHAY GENERAL BANCORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
Three months ended Twelve months ended December 31, December 31, --------------------------- --------------------------- (In thousands, except share and per share data) 2005 2004 2005 2004 - ------------------------------------------------------------------------------------------------------------------ INTEREST INCOME Interest on loans $ 82,119 $ 55,858 $ 285,108 $ 200,109 Interest on securities available-for-sale - taxable 12,924 18,064 60,549 70,418 Interest on securities available-for-sale - nontaxable 861 1,002 3,689 3,811 Dividend income 206 95 710 386 Interest on federal funds sold and securities purchased under agreements to resell 17 2 237 104 Interest on deposits with banks 88 49 368 151 --------------------------- --------------------------- Total interest income 96,215 75,070 350,661 274,979 --------------------------- --------------------------- INTEREST EXPENSE Time deposits of $100 or more 20,274 9,425 60,477 32,280 Other deposits 8,641 5,451 32,131 17,555 Other borrowed funds 4,928 3,489 17,671 10,327 --------------------------- --------------------------- Total interest expense 33,843 18,365 110,279 60,162 --------------------------- --------------------------- Net interest income before provision (reversal) for loan losses 62,372 56,705 240,382 214,817 Provision (reversal) for loan losses - - (500) - --------------------------- --------------------------- Net interest income after provision (reversal) for loan losses 62,372 56,705 240,882 214,817 --------------------------- --------------------------- NON-INTEREST INCOME Securities gains (losses), net 183 (4,940) 1,473 (3,979) Letters of credit commissions 1,100 1,284 4,191 4,741 Depository service fees 1,279 1,559 5,627 6,446 Gains on sale of premises and equipment - - 958 24 Other operating income 2,619 2,726 10,237 9,033 --------------------------- --------------------------- Total non-interest income 5,181 629 22,486 16,265 --------------------------- --------------------------- NON-INTEREST EXPENSE Salaries and employee benefits 13,737 12,584 52,571 49,149 Occupancy expense 2,232 2,058 8,841 8,093 Computer and equipment expense 1,757 1,757 7,003 7,020 Professional services expense 2,109 1,769 7,695 6,671 FDIC and State assessments 252 255 997 1,032 Marketing expense 850 641 2,487 2,474 Other real estate owned expense (income) (35) (250) (46) 292 Operations of affordable housing investments 1,052 823 4,042 2,900 Amortization of core deposit intangibles 1,404 1,333 5,955 5,333 Other operating expense 1,733 1,825 7,342 7,696 --------------------------- --------------------------- Total non-interest expense 25,091 22,795 96,887 90,660 --------------------------- --------------------------- Income before income tax expense 42,462 34,539 166,481 140,422 Income tax expense 15,750 12,971 62,390 53,609 --------------------------- --------------------------- Net income 26,712 21,568 104,091 86,813 --------------------------- --------------------------- Other comprehensive loss, net of tax (3,215) (1,177) (16,881) (5,817) --------------------------- --------------------------- Total comprehensive income $ 23,497 $ 20,391 $ 87,210 $ 80,996 =========================== =========================== Net income per common share: Basic $ 0.53 $ 0.43 $ 2.07 $ 1.74 Diluted $ 0.53 $ 0.42 $ 2.05 $ 1.72 Cash dividends paid per common share $ 0.09 $ 0.09 $ 0.36 $ 0.30 Basic average common shares outstanding 50,168,588 50,210,808 50,373,076 49,869,271 Diluted average common shares outstanding 50,674,892 50,934,828 50,821,093 50,480,154
(more) Page 11 CATHAY GENERAL BANCORP AVERAGE BALANCES - SELECTED CONSOLIDATED FINANCIAL INFORMATION (Unaudited)
For the three months ended, - ------------------------------------------------------------------------------------------------------------------------------ (In thousands) December 31, 2005 December 31, 2004 September 30, 2005 - ------------------------------------------------------------ ----------------------------- ----------------------------- Average Average Average Average Yield/Rate Average Yield/Rate Average Yield/Rate Balance (1)(2) Balance (1)(2) Balance (1)(2) ----------------------------- ----------------------------- ----------------------------- INTEREST-EARNING ASSETS Federal funds sold and securities purchased under agreements to resell $ 1,712 3.94% $ 505 1.66% $ 1,084 3.29% Taxable securities available-for-sale 1,186,340 4.32% 1,681,589 4.27% 1,293,656 4.13% Tax-exempt securities available-for-sale (1) 97,594 6.54% 109,497 6.08% 101,784 6.38% Loans and leases (2) 4,459,628 7.31% 3,712,830 5.99% 4,217,559 7.00% Deposits with banks 11,933 2.93% 5,836 3.31% 8,918 4.49% ------------- ------------- ------------- Total interest-earning assets $ 5,757,207 6.67% $ 5,510,257 5.46% $ 5,623,001 6.33% ------------- ------------- ------------- INTEREST-BEARING LIABILITIES Interest-bearing demand deposits $ 773,885 1.59% $ 868,792 0.74% $ 756,822 1.15% Savings deposits 372,789 0.73% 422,086 0.35% 384,064 0.55% Time deposits 3,057,072 3.26% 2,621,548 1.95% 3,022,360 2.97% ------------- ------------- ------------- Total interest-bearing deposits $ 4,203,746 2.73% $ 3,912,426 1.51% $ 4,163,246 2.42% Other borrowed funds 466,929 4.19% 568,178 2.44% 385,714 3.79% ------------- ------------- ------------- Total interest-bearing liabilities 4,670,675 2.87% 4,480,604 1.63% 4,548,960 2.54% Non-interest-bearing demand deposits 726,348 692,379 704,934 ------------- ------------- ------------- Total deposits and other borrowed funds $ 5,397,023 $ 5,172,983 $ 5,253,894 ------------- ------------- ------------- Total average assets $ 6,223,906 $ 5,965,757 $ 6,071,519 Total average stockholders' equity $ 760,585 $ 689,945 $ 744,368 ------------- ------------- -------------
For the twelve months ended, - --------------------------------------------------------------------------------------------- (In thousands) December 31, 2005 December 31, 2004 - ------------------------------------------------------------ ----------------------------- Average Average Average Yield/Rate Average Yield/Rate Balance (1) (2) Balance (1) (2) ----------------------------- ----------------------------- INTEREST-EARNING ASSETS Federal funds sold and securities purchased under agreements to resell $ 8,005 2.96% $ 12,424 0.84% Taxable securities available-for-sale 1,405,305 4.31% 1,661,862 4.24% Tax-exempt securities available-for-sale (1) 103,026 6.46% 105,893 6.08% Loans and leases 4,165,301 6.84% 3,522,575 5.68% Deposits with banks 9,517 3.87% 5,419 2.79% ------------- ------------- Total interest-earning assets $ 5,691,154 6.20% $ 5,308,173 5.22% ------------- ------------- INTEREST-BEARING LIABILITIES Interest-bearing demand deposits $ 785,546 1.15% $ 884,158 0.63% Savings deposits 390,787 0.51% 421,959 0.31% Time deposits 2,929,365 2.79% 2,522,845 1.70% ------------- ------------- Total interest-bearing deposits $ 4,105,698 2.26% $ 3,828,962 1.30% Other borrowed funds 519,908 3.40% 514,092 1.84% ------------- ------------- Total interest-bearing liabilities 4,625,606 2.38% 4,343,054 1.39% Non-interest-bearing demand deposits 703,185 664,329 ------------- ------------- Total deposits and other borrowed funds $ 5,328,791 $ 5,007,383 ------------- ------------- Total average assets $ 6,146,777 $ 5,753,208 Total average stockholders' equity $ 740,921 $ 654,450 ------------- -------------
(1) The average yield has been adjusted to a fully taxable-equivalent basis for certain securities of states and political subdivisions and other securities held using a statutory Federal income tax rate of 35%. (2) Yields include net loan fees. Non-accrual loans are included in the average balance. -----END PRIVACY-ENHANCED MESSAGE-----